Why small to mid- sized firms are approaching a critical crossroad in Legal Tech

Outside of Big Law, it’s all too common for firms to make tactical – as opposed to strategic – decisions when it comes to technology. In this article Tikit’s Peter Zver* highlights the danger firms put themselves in when they miss the more strategic play.

Why small to mid- sized firms are approaching a critical crossroad in Legal Tech

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Is there a lot going on at your firm? Are there daily and hourly decisions to be made? You make them, of course. But every so often, there’s probably a gnawing, underlying feeling that it might not hurt if the firm was to improve its long-term strategic planning. But you mostly park those feelings, because day to day there’s just a lot to get through. And actually the “status quo” is doing okay.

And on today’s urgent technology list, a typical issue may be addressing a Microsoft announcement that in three months’ time support for a server operating system will be dropped. With a three-month window the pressure is on to tackle the situation. So you ask: “What are the implications?” And you’re told it’s about security or about back-up or something equally alarming. Something about how now’s the time to upgrade the server and in turn the applications that reside on it … which in turn may require processing power and storage capacity... It sounds concerning, and expensive. How will you proceed? Chances are that you’ll say, “Okay. Get me some costs… What’s next?”

And so it goes by that quickly. In the blink of an eye. Without even really taking a beat, the firm is on its way to doing the thing it did last time, and the time before that, and the time before that. Because it’s just there to be done. And nobody, but nobody, has noticed what you just did. Which is that you sailed straight past the crossroads, the junction, the fork in the road; the moment where you could have just… paused.

Stop, look, listen

What I’m advocating is that firms should do is nothing more complicated than recognize a moment. That’s all. Simply recognize the moment when the firm still has a choice. It’s the moment when your firm could take a different route. One that’s become available to firms over the last five years. A route that has redefined how technology is delivered and consumed by the firm and its clients.

Because unfortunately what we see time and time again is that the split second a firm opts to get costs for a technology upgrade – it has already set one foot on the road to irrevocably re-committing to on-premise solutions. And once committed to investing $X, the firm is often locked in for the next five to eight-year cycle in order to amortize the Capital Expenditure (CapEx). There’s no turning back. So all I’m saying is: recognize the moment when you could take another path.

But more than that. Be aware that this moment isn’t necessarily that easy to spot. Indeed, why does it happen that firms are so likely to miss this metaphorical crossroads where a right turn embarks you on one technology journey and a left turn takes you to quite another? Well there are a couple of factors which obscure the opportunity.

The first is that, as alluded to above, smaller firms have less capacity for long-term planning and that includes strategic planning about the role and form of future technology. The consequence is that all too often decisions are essentially tactical, rather than strategic. They are point solutions to a current issue. It appears that now is the moment to upgrade the server, to invest in new processing power and greater storage/CPU capacity for the future. So you make a tactical decision to go ahead with that because there’s no overarching strategy that is guiding a different, more far-sighted course.

The second reason why managing partners and CFOs might miss the moment is because, well, there will probably be voices in the room which aren’t pointing out that you have options. Very naturally and very often there are trusted, experienced people in-house who’re comfortable with how things are and want to stick with what they know – all for the good of the firm. In turn, they’re probably aligned with select trusted tech vendors who are – naturally – promoting their primary interests (their solutions and product suites). But the net result is that options tend not to be presented. So there doesn’t seem like much of a crossroads to negotiate. In fact it’s a bit like cruising up to a traffic cop with a whistle and flags – and he’s just waving you to turn right, right, right! So the moment just flashes by – that moment where you might notice that the route to the left is clear and open and a viable option.

The road less travelled

So what is it to the left that’s so alluring? What is the “road less travelled”? It’s simply this: the option to embark on a cloud-based strategy instead of an on-premise one.

And it is a road less travelled, for now. As ILTA’s 2019 Technology Suvey reveals, out of 359 participating firms with 149 or fewer attorneys, just 22 per cent are using cloud-based legal technology solutions. It might be a leap but I’ll take it and say that probably the more technologically confident and advanced firms are the ones taking part in the ILTA survey in the first place. It suggests that probably fewer than 1 in 5 small and medium-sized firms as a whole are in the cloud. So far. But I don’t think it’s going to stay that way for too long given that, from the same ILTA survey and “for the upcoming year”, 68 per cent of firms with fewer than 50 attorneys plan to increase their adoption of cloud-based solutions; and 70% of firms with 50 – 149 attorneys plan the same.  

What are the advantages of being in the cloud? I’ll quickly list them. You eliminate the time and cost of an on-premise implementation, reduce IT infrastructure costs, achieve rapid utilization, and gain higher levels of data security along with greater resilience and availability, all ensuring business continuity. Upgrades will happen without cost or disruptions; systems can be accessed anytime, anywhere on any device. Capex expenditure is replaced by a monthly subscription and you have infinite elasticity to scale up or scale down as capacity is needed.

Meanwhile, with on-premise you have the capital cost, the lower resilience, availability, security and flexibility. I’ll add that one of the problematic factors is that you’ll be cajoled into a capital investment which is typically an over-investment, as you’ll be buying not only the capacity you need now, but future capacity. This flies in the face of Moore’s Law which holds that processing capacity doubles every two years even as the price halves. So you end up in expensive handcuffs while your competitors are free to take advantage of all that cloud platforms can offer.

But that cloud is probably much better for your firm isn’t really my point. To be clear, I’m merely advocating that firms don’t inadvertently shut-down their chance to properly evaluate their options before committing   spend to supporting the “status quo”: aka on-premise solutions. They should recognize the opportunity; and get an unbiased view of their options via a legitimate cost/benefit analysis (business case). Have a strategic vision for your technology investments, be aware of when there is a decision to be made and get the best advice on what it should be. Above all, recognize when you’ve come to a critical strategic crossroads.

Find out why one firm took the plunge and moved to the cloud and the benefits it has brought them and their employees: https://links.tikit.com/MerovitzCLM

Join us for an ILTA educational webinar on April 8th, 2020. Register here.

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